A change in the law means many more GCC firms are likely to be setting up branches in the UAE, says a Ministry of Finance official.
UAE set for rush of companies wanting to set up shop
The UAE is bracing for a flood of interest from GCC companies after a recent rule change allowing them to set up branches in the country more easily, says a senior Ministry of Finance official.
Now other states need to do the same to make it easier for UAE firms to become established across the Gulf under common market laws, said Khalid Al Bustani, the assistant undersecretary for international financial relations at the Ministry of Finance.
"We are sure more investors from the GCC will be coming to the UAE this year," he said. "One reason is the normal economic growth and the other is the change of legislation to make it easier for GCC companies to open branches in the UAE."
More GCC businesses are already licensed in the UAE than in other states. The UAE granted 26,223 business licences to GCC nationals in 2010, up nearly 9 per cent from the year before, according to the latest ministry data.
GCC firms wanting to open branches in the Emirates in the past faced a number of regulatory hurdles. But this month the Cabinet approved a law enabling them to open branches without restrictions and giving them the same treatment as local companies.
The change is the latest step taken by the UAE to satisfy the GCC common market, which was set up in 2008 to promote the free flow of trade, labour and capital.
The UAE, however, wants it to become easier for companies from the Emirates to register and conduct business in other GCC states.
"We are looking to attract GCC companies to come here as we want an open market. We expect other GCC states to do the same as us, and most of them are," Mr Al Bustani said. "But this is the issue we are bringing to the GCC, as a lot of [UAE] companies still face challenges and impediments to set up business elsewhere."
GCC nationals can work, buy houses, trade shares, attend school and receive medical treatment in all six states.
But obstacles have beset other aspects of the common market. The problems are mainly attributable to delays in individual states in pushing through laws agreed on at a GCC ministerial level.
Border disputes and trade barriers have disrupted the flow of some intra-GCC trade, despite the existence of a customs union. A cornerstone of the common market, the customs union is meant to establish a free-trade bloc among GCC nations.
The region has an estimated combined market size of US$1 trillion (Dh3.67tn) and average per-capita GDP of $45,000, giving it significant clout as an economic bloc.